The Chartered Institute of Taxation (CIOT) has urged employers to consider supporting employees working from home because of the coronavirus outbreak, with a tax-free payment equivalent to over £300 per year that could help with the costs of higher household bills.

The payment is one of several of measures included in a new guide produced by the CIOT on the tax implications of working from home.

The Institute highlighted existing HMRC guidelines that permit employers to provide their workers who regularly work from home under an agreed arrangement with a tax-free payment – helping to cover costs associated with higher household bills.

HMRC has confirmed that employers who require their employees to work from home as a result of the temporary closure of their business premises due to coronavirus would be able to provide the tax-free payment as a means of offsetting reasonable additional household expenses.

This payment increased to £6 per week, or £26 per month, from 6 April as a result of measures announced in the March Budget, and is usually paid to workers in addition to their salary.

It is up to an employer to decide whether to make the payment, the CIOT suggested, adding that if if they don’t, employees may be able to claim tax relief from HMRC on the additional household costs of their home office – provided they keep records of these costs and can prove to HMRC that they were “wholly, exclusively and necessarily” in the performance of their work.

Chair of the CIOT’s Employment Taxes sub-committee, Colin Ben-Nathan, commented: “In normal circumstances, if an employer has an agreement with their worker to work regularly from home, then they can choose to pay them a tax-free payment to help with extra costs such as heating and lighting their home workspace.

“HMRC has confirmed that following the Government’s coronavirus guidance, employees who are working temporarily from home will be eligible to receive this tax-free payment because they currently have no appropriate office-based facilities.

“While we expect that this situation will be temporary, the extra £6 per week that is payable to employees through their regular salary payments would be a welcome boost – particularly for those on lower incomes – to help offset some of the additional costs associated with working from home.”

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